They walk inside with stars in their eyes, just dreaming that one day they can call the HGTV Dream Home "home." Once they win, well that's when reality sets in and it's time to pay the pauper.
Here's how it works. The prize winnings, which includes the house, the 2005 GMC Denali, the designer furnishings throughout along with other bells and whistles inside and out, total 1.5 million dollars. Then add the $250,000 in cash from Lending Tree, which gives you a grand total of $1,750,000. But don't get excited just yet. First you have to pay the taxes on it. The maximum tax bracket for 2005 is 35%. Multiply that by your winnings and you have to pay the government $612,500 cold hard cash. "So if they don't have the cash," says Tyler CPA Jerry Garrett, "then probably they're going to have to sell the house to get the cash." Garrett says since most of the Dream Homes have been sold don't be surprised if the one on Lake Tyler is too. "It's probably what is going to happen in most cases I would say. Like I said (it has happened to) 6 of the last 7, so how many people can come up with the cash."
But selling it can be a profitable option too. Say you sell the home at 1.5 million. Remember, you still owe $612,500 in taxes. Subtracting that leaves you with $887,500. You still have deduct property taxes for the months the home is on the market which could add up to thousands. Plus, utility costs, Homeowner's Association fees and other expenses that come along with up-keeping the Dream Home. All this is not stopping the millions that will sign up. Just think, it doesn't cost anything to dream.
We talked to HGTV who says it doesn't mind that winners sell the Dream Home. It just means the person who bought it really wants it, while the winner who sold it makes enough of a profit to build a dream home of his or her own.
Christine Nelson reporting. email@example.com
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